I'm getting the 'rich people do fraud' stuff this morning, and the answer as a professional is that the common person intuition that we don't do enough enforcement against fraud is correct but the intuition that most rich people are engaged in some level of knowing fraud is wholly wrong
The at-highest possible ceiling I'd put it at is 10% of the population, and I would wager the majority of that is immaterial, but the small 1% of people are doing an -insane- amount of obvious fraud all the time
There is a very large portion of rich people who are at least twice that ceiling who are -incredibly- fastidious on the compliance side of both their businesses and their personal tax and even eschew tax strategies to reduce tax paid for fear of nonexistent concerns that I have also allayed.
Did grand jury duty for a year and one of the crazier revelations was the tax fraud cases where people would just submit tax returns with made up numbers under other names, calculated to give a return of like $10-$100k.
They were easily caught because it was linked to their bank account 🤦
In the same way that a McDonald’s franchise is actually going to be better at those food safety inspections than the local dinner, most business fraud is the small time one person companies.
The thing about the way trump structured trump org is that it maintained that small time fraud and crime angle while controlling a large amount of money.
My dad always got indignant that he got audited more than normal just because he self filed his taxes. “Yeah dad, self filing and upper middle class is basically the profile of the median tax cheat. My CPA on the other hand isn’t gonna risk his freedom or license to reduce my tax bill.”
I’ve worked for a bunch of big companies and there’s a real sense of “everything important is going to get written down somewhere and could come out in court. So, don’t try to get away with stuff.”
Not that they’re all saints but you just don’t straight-up make up shit!
(Like, at Microsoft, one slide in orientation was literally just “here are a bunch of words that sound really bad when read back to you by opposing counsel, so never use them in an email about a competitor.” Words like “smash”, “crush”, “destroy”. Trump never took that training!)
Yeah, like contract with the local government to use prison labor to enrich yourselves and the prison while paying the actual laborers pennies can be legal, if you follow the right process.
I have mixed feelings about the intent requirements of a lot of white collar statutes but it does make the people who get pinched pretty uniformly unsympathetic.
Also thank god you CAN do it right and still come out ahead. I think so much of the problem is people think you can’t win and do it while being moral, ethical and honest.
A lot of people find comfort and even joy in following rules. Most of us want to think of ourselves as good people.
For some, being a good person means following the rules especially when doing so is not in their personal interest.
When you make 20 mln USD a year, paying even 10 mln in tax instead of 1 mln doesn't hurt because at the end of the day you still made 10 mln! And you have a clean conscience.
On the flip side, there are people who make much less than that but will (stupidly, IMO) go for some semi-legal tax avoidance schemes just to get the thrill to conning the taxman. It's often more a cultural thing.
I think the cultural element is a big thing. I've known middle-class folks who engaged in tons of dubious "aggressive" tax planning because they believed "everyone does it" and "sticking it to the government" is how you "win" at filing taxes.
Some people seem to find the very concept of taxation to be personally insulting and will do almost anything to avoid paying them. It's a bit like how some deadbeat dads will live in a shack and live off cash gigs to avoid paying child support. Not a great mindset for business though, IMO.
More to the point, it's better to pay a bunch of tax to the system that protects your wealth and lifestyle than it is to risk turning that system against you by committing a crime.
Even people who get rich through literal criminal activity tend to want to go straight after a certain point.
At least as long as the interest rates are near zero.
BTW, I know from bitter family experience that "get it wrong" can mean also "believing the tax office employee telling you you got it right and later being told they changed their mind".
It could be! My very brief and limited experience in a regulatory field was that big corporations would fight any new regulations tooth and nail in court, lose, and then comply with them fastidiously, whereas smaller ones would break regs by accident a lot. Could be the same here.
Also overlaps with: “the bigger your fraud operation is, the more likely it is to be noticed” and “you’re exposed to lots of people who will figure out you’re a fraud and find a way to cut themselves in, via blackmail or whistleblower”
the best kind of fraud and crime is the stuff that is, at least ostensibly, technically legal and not against the rules. Similar to how most hacking is calling up a 75 year old going "I'm from the government, give me your amazon password"
IANAL or Smart
but I think fraudulently stating ya work for the government in service of another crime might not be ostensibly, technically legal
google suggests that just making the false claim about representing the government, is a crime.
25 CFR § 11.432 - Impersonating a public servant.
This is the way that people's intuitions work. 1% of people doing things obviously with impunity seems like it must be 40-50% of the whole, or 98% of a category.
